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Recovering debts in a post Brexit Britain

This article looks at the possible impact for Credit Managers on our upcoming exit from the EU, and how they will recover debts from EU customers.

Current Position

Suppliers of goods and services to the EU will, in most cases, include a clause in their contracts dealing with law and jurisdiction. The clause tends to say that the parties agree that the courts of one of the constituent parts of the United Kingdom will have exclusive jurisdiction, and that the laws of that jurisdiction will apply.

If you have supplied goods or services to a company based in the EU, and this type of clause is in place, then you will be able to sue the EU based company in a local court, using English, Scottish or Northern Irish law as appropriate. 

Once you have your judgment in the local court, you will then need to enforce. Within the EU, you currently benefit from a regime that (once navigated) enables you to enforce your judgment in a member state as if it were a local judgment.    

Where the contract does not contain such a clause, UK companies currently benefit from the European Payment Order mechanism, which greatly simplifies the process of obtaining a judgment or its equivalent against a company based in another EU member state.

The Future

However, in a post Brexit world, what system will be in place to help you recover your judgment debts from EU based customers? We can’t know at this stage, but there are interesting discussion points that we can address now, and these might help credit managers frame their internal planning.

Credit Insurance

Arguably credit insurers are well placed to weather the changes and may well get the most out of a post-Brexit debt recovery environment. This is because UK based credit insurers generally have a European network of offices and brokers.

Depending on the terms of the policy and the branch office concerned, it is possible that a credit insurer will have a process in place that allows them to use local agents to try to collect the debt in the relevant member state, and to maximise the efficiencies available to that local office. In this way, companies wishing to trade with EU based customers after BREXIT may find that a credit insurance policy is a good option for reducing the costs and risks of running up credit lines with those customers.


If you have a European subsidiary, or parent company, in your customer’s member state, then there could be an option for assigning the debt to your subsidiary or parent to allow an easier route for debt collection. Jurisdiction clauses, assignment agreements, and other legal issues would need to be considered, and legal advice should be sought to adapt to the relevant circumstances.

There might also be scope for third party agents in this space to take an assignment of the debt, and to recover the debt under arrangements with you for payment.  This model would need careful formulation, and legal advice should be sought if this is contemplated.

Alternative Trading Terms

This is an area that will require focus as the legal landscape develops in any event, but there might be an opportunity to think about different models for how you are paid for goods and services supplied to customers in EU member states post-Brexit.

For example, consideration might be given to different payment models including money on account and conditional payment simultaneous with delivery or at key stages.

Should you still look to gain a judgment in the UK if we leave the EU without a deal?

If we leave the EU without a deal, the option to seek a European Payment Order will likely no longer be available. If you wish to gain a judgment in England and Wales, Scotland or Northern Ireland then life will be easier with a clause in your contract giving exclusive jurisdiction to the courts of your chosen jurisdiction and stating that the local law applies. Also consider looking at any notice provisions in your terms and conditions as there could be a way to help smooth the way. Please discuss with your legal adviser or contact the author.

Once you have your judgment, the local laws of the member state in question will be relevant. You will then need the help of a local agency to navigate through the enforcement process. This is not as hard as you might think, and so the author considers that there are still good arguments for issuing a court case in England & Wales against a debtor in an EU member state post Brexit.


Whilst it will be some time before the dust settles after we leave the EU, there is thinking that can be undertaken now to consider the best model for debt collection in the event that we do not end up with the current system for enforcement of judgments against customers in member states. While we have this period of uncertainty before the manner of our departure from the EU is known, Credit Managers may still wish to grab a blank piece of paper and set out their Plan B.


This information is for educational purposes only and does not constitute legal advice. It is recommended that specific professional advice is sought before acting on any of the information given. © Shoosmiths LLP 2022.


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